[bitcoin-dev] Scaling Bitcoin conference micro-report

[Mike Hearn]

>
> Your argument is that the state is not a threat to a system designed to
> deprive the state of seigniorage, because the state will see that system
> as too important?
>

And so we get to one of the hearts of the debate.

The axiom upon which you and NxtChg disagree is this: he/she believes
governments can crush Bitcoin if they want regardless of how decentralised
it is, and you don't.

If one believes governments have the power to end Bitcoin no matter what,
then the only true protection comes from popularity. Governments find it
hard to ban things that are wildly popular with their voters. This is the
Uber approach: grow fast, annoy governments, but be popular enough that
banning you is politically risky.

If you don't believe that governments can end Bitcoin because of
decentralisation, then the opposite conclusion is logical: growth can be
dangerous because stateless money will be inherently opposed by the state,
therefore if growth == less decentralisation, growth increases the risk of
state shutdown.

I don't think we have to choose between decentralisation and growth
actually - computers are just amazingly fast. But that's irrelevant here.

The point is, your disagreement is summed up by your statement:


> Bitcoin cannot be both decentralized and reliant on being, "too important
> to close". If it can be closed there is insufficient decentralization.
>

I believe this statement is wrong because governments can shut down Bitcoin
at any point regardless of its level of decentralisation. This is true
because:

   - Most governments can easily spend enough money to do a 51% attack,
   especially if they can compel chip fabs to cooperate for free. This attack
   works regardless of how decentralised Bitcoin is.

   - Any government can end Bitcoin usage in its territory by jailing
   anyone who advertises acceptance/trading of bitcoins, or prices in BTC.
   Because merchants *must* advertise in order to alert customers that
   trades in BTC are possible, this is an attack which is unsolvable. If
   ordinary people can find such merchants so can government agents.

It may appear that trade cannot be suppressed because merchants can all
become anonymous too, a la Silk Road. However, if use of Bitcoin is banned
then it becomes impossible to convert coins into local currency as that
requires cooperation of banks ..... making it useless for even anonymous
merchants. An outlaw currency is useless even to outlaws.

Because Bitcoin's existence ultimately relies on government cooperation and
acceptance, the best way to ensure its survival is growth. Lots of it.
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